Pfizer and co-development partner Nektar Therapeutics seem to have kissed and made up after a recent falling-out over the drugs giant’s decision last month to stop marketing the diabetes treatment Exubera.

The firms have announced that Nektar will get a $135 million one-time payment which will leave “resolved all outstanding contractual issues in connection with Exubera (inhaled insulin).” The settlement also covers Nektar’s follow-up inhaled insulin product, referred to as NGI, which is currently in Phase I.

This act of reconciliation comes after Pfizer finally gave up on Exubera, having acquired co-marketing rights to the drug from partner Sanofi-Aventis for $1.3 billion in January 2006. It was launched in the middle of last year but failed to make any sort of mark. Chief executive Jeff Kindler said at the time that “despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians [so] we have therefore concluded that further investment in this product is unwarranted.”

However it appeared that Pfizer had forgotten to tell Nektar and the latter’s non-plussed chief Howard Robin was non-plussed, saying that “we first learned…of Pfizer's decision to walk away from Exubera from their press release". He added that his company “has been very disappointed in Pfizer's performance in marketing Exubera” and his criticism of the latter firm brought some unwelcome press attention which suggested that the New York-based behemoth may not be a great partner for smaller companies.

Everything seems sorted now, however, and an agreement has been signed. If a new partner is selected, Pfizer will transfer its remaining rights and “all economic benefits”, including regulatory filings, for Exubera and NGI. Pfizer will continue to supply the product for at least three months after a deal with the new partner has been signed.

Mr Kindler and Mr Robin also issued a joint statement saying that the agreement “strengthens our relationship and demonstrates our ability to work together to craft a solution”. They added that the firms “look forward to advancing our joint development of PEGylated human growth hormone therapy”.